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India's Agricultural Subsidies
Context
Several member countries of the World Trade Organization (WTO) are questioning India over its 50% increase in support to farmers in 2022-23. India's allocation for public stockholding for food security has also come under scrutiny, especially with a 21% increase from the previous year.
India's Subsidies for Low-Income Farmers:
- India reported a significant increase in subsidies for "low-income or resource-poor" farmers, reaching $48.1 billion in 2022-23, a 50% rise from the previous year.
- The subsidies cover various inputs like irrigation, fertilizers, and electricity, benefiting nearly all farm holdings in India according to the Agricultural Census.
- WTO’s member countries have been seeking a cut in India’s de minimisentitlement under the WTO’s Agreement on Agriculture (AoA).
Importance of Indian Farm Subsidies:
- India's farm subsidies are vital for its marginal farmers and ensure food security for millions. The demand for a cut in subsidies by developed countries seems unjust considering their lifeline status for Indian farmers.
- Agricultural Realities in Developing Nations: Developing countries have a higher number of people engaged in agriculture, with the sector contributing significantly to their GDP. Moreover, the majority of farmers in these nations are low-income or resource-poor, necessitating government support.
- Disparity in Total Domestic Support: Developed countries offer significantly higher total domestic support to their farmers compared to developing nations like India. For instance, while the US provides $61,286 per farmer, India's support stands at just $282.
- AMS Entitlement and Discrimination: Developed countries benefit from the Aggregate Measurement of Support (AMS) entitlement, allowing them to offer higher support. In contrast, developing countries face policy constraints due to restricted entitlements, leading to unfair trade practices.
- Addressing Unfairness in Trade: India invoked the WTO peace clause after exceeding the ceiling for farm support, highlighting the challenges faced by developing nations.
Fact Box:What is WTO Agreement?
Government Subsidies for Farmers:
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PYQQ: What are the direct and indirect subsidies provided to farm sector in India? Discuss the issues raised by the World Trade Organization (WTO) in relation to agricultural subsidies. [2023] Q: WTO is an important international institution where decisions taken affect countries in a profound manner. What is the mandate of WTO and how binding are their decisions? Critically analyse India’s stand on the latest round of talks on Food security. [2014] |
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